Quest Diagnostics Inc. Reports Fourth Quarter And Full Year 2014 Financial Results; Provides Guidance For Full Year 2015; Increases Dividend 15%

MADISON, N.J., Jan. 29, 2015 /PRNewswire/ --

• Fourth quarter revenues from continuing operations of $1.9 billion, up 7.2% versus prior year
• Adjusted diluted EPS from continuing operations of $1.08, up 4.9% versus prior year
• Reported diluted EPS from continuing operations of $1.26, up 30% versus prior year
• Dividend increased 15% to $0.38 per quarter
• Full year 2015 revenues to grow 2% to 3%
• Full year 2015 adjusted diluted EPS excluding amortization expense expected to be between $4.70 and $4.85

Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic information services, announced today that for the fourth quarter ended December 31, 2014, adjusted income from continuing operations grew to $158 million, or $1.08 per diluted share, compared to $151 million, or $1.03 per diluted share, for 2013.

For the fourth quarter of 2014, reported income from continuing operations was $185 million, or $1.26 per diluted share.  Income from continuing operations in the fourth quarter of 2014 benefited from the favorable resolution of tax contingencies of $44 million, or $0.30 per diluted share. This benefit was partially offset by $17 million, or $0.12 per diluted share, of charges primarily related to restructuring and integration costs and ongoing efforts to drive operational excellence.  In the fourth quarter of 2013, reported income from continuing operations was $143 million, or $0.97 per diluted share.

Revenues from continuing operations were $1.9 billion for the fourth quarter of 2014, 7.2% higher than the prior year. Organic revenues from continuing operations increased for the fourth quarter by 0.6% compared to the prior year.  Diagnostic information services revenues increased 7.1% compared to a year ago; volume, measured by the number of requisitions, increased 8.8% versus a year ago; and revenue per requisition was 1.5% lower than a year ago.  Excluding acquisitions, revenue per requisition for diagnostic information services was essentially unchanged from a year ago.

For the fourth quarter of 2014, adjusted operating income from continuing operations grew modestly to $283 million, or 15.0% of revenues, compared to $282 million, or 16.1% of revenues, for the fourth quarter of 2013. For the fourth quarter of 2014, reported operating income from continuing operations was $257 million, or 13.7% of revenues, compared to $270 million, or 15.3% of revenues in the fourth quarter of 2013. Cash provided by operations was $303 million in the fourth quarter of 2014.

"We ended 2014 strong, and in the fourth quarter generated growth in revenues and EPS," said Steve Rusckowski, President and CEO.  "The 2015 outlook we are providing today is based on our expectations for strengthening operational performance and an improving business environment.  Further, based on our ability to continue to generate strong cash flow, today we are announcing the  fourth increase in our dividend since 2011."

Full Year 2014 Performance

Revenues from continuing operations were $7.4 billion for the full year 2014, an increase of 4% compared to the prior year. Adjusted income from continuing operations was $598 million, or $4.10 per diluted share, compared to $612 million, or $4.00 per diluted share, in 2013.

Reported income from continuing operations for the full year 2014 was $551 million, or $3.78 per diluted share.  In 2013, reported income from continuing operations was $814 million, or $5.31 per diluted share, including a gain of approximately $300 million on the sale of ibrutinib royalty rights.

Adjusted operating income from continuing operations for the full year 2014 was $1.1 billion, or 15.0% of revenues, compared to $1.2 billion, or 16.2% of revenues, for 2013. Reported operating income from continuing operations was $983 million, or 13.2% of revenues, compared to $1.5 billion, or 20.6% of revenues, in 2013. Cash from operations was $938 million for the full year 2014. Capital expenditures for 2014 were $308 million.

Dividend Increased

Quest Diagnostics' Board of Directors authorized a 15% increase in its quarterly dividend from $0.33 to $0.38 per share, or $1.52 per share annually, payable on April 22, 2015, to shareholders of record of Quest Diagnostics common stock on April 8, 2015.

Outlook for Full Year 2015

At its November 5, 2014 Investor Day the company indicated it would begin to present adjusted diluted EPS excluding amortization expense, which the company believes provides investors with better insight into its underlying operating performance.  As a result, the company's presentation of 2015 adjusted diluted EPS guidance described below excludes the impact of special items and amortization expense.  For the full year 2014, adjusted diluted EPS excluding amortization expense was $4.50.

For 2015, the company estimates results from continuing operations, before special items as follows:

• Revenues to increase approximately 2% to 3%, compared to 2014;
• Adjusted diluted EPS excluding amortization expense to be between $4.70 and $4.85;
• Cash provided by operations to approximate $850 million; and
• Capital expenditures to approximate $300 million

Note on Non-GAAP Financial Measures

As used in this press release, for the purpose of earnings the term "adjusted" refers to the operating performance measures that exclude the gain on sale of ibrutinib royalty rights, restructuring and integration charges, favorable resolution of tax contingencies, loss on sale of the Enterix business and other items. For 2015 guidance and the presentation of 2014 full year results, adjusted diluted EPS excluding amortization expense represents the Company's results before the impact of special items and amortization expense. Adjusted measures are presented because management believes those measures are useful adjuncts to reported results under accounting principles generally accepted in the United States.  Adjusted measures should not be considered as an alternative to the corresponding measures determined under accounting principles generally accepted in the United States.

The attached tables include reconciliations of adjusted operating performance measures to measures reported under accounting principles generally accepted in the United States.

Conference Call Information

Quest Diagnostics will hold its quarterly conference call to discuss financial results beginning at 8:30 a.m. Eastern Time today. The conference call can also be accessed in listen-only mode by dialing 415-228-4961, passcode 3214469. The company suggests participants dial in approximately 10 minutes before the call.  A replay of the call may be accessed online at www.QuestDiagnostics.com/investor or by phone at 866-498-3465 for domestic callers or 203-369-1791 for international callers. Telephone replays will be available from approximately 10:30 a.m. Eastern Time today until midnight Eastern Time on March 1, 2015.

Anyone listening to the call is encouraged to read the company's periodic reports, on file with the Securities and Exchange Commission, including the discussion of risk factors and historical results of operations and financial condition in those reports.

About Quest Diagnostics

Quest Diagnostics is the world's leading provider of diagnostic information services needed to make better healthcare decisions. The company offers the broadest access to diagnostic testing services through its network of laboratories and patient service centers, and provides interpretive consultation through its extensive medical and scientific staff. Quest Diagnostics is a pioneer in developing innovative diagnostic tests and advanced healthcare information technology solutions that help improve patient care. Additional company information is available at QuestDiagnostics.com.

The statements in this press release which are not historical facts may be forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date that they are made and which reflect management's current estimates, projections, expectations or beliefs and which involve risks and uncertainties that could cause actual results and outcomes to be materially different.

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